National Tax Service Administrator Lim Gwang-hyun said that if multi-homeowners receiving tax benefits under the purchase-registered rental system are given a chance to sell, it could have the effect of supplying 68,000 Seoul apartments. It appears to revive the debate over reconsidering the exemption from heavy capital gains taxes for registered rental multi-homeowners that President Lee Jae-myung raised in Feb.
Administrator Lim stated accordingly in a post titled "Thoughts on purchase-registered rental apartments" on X (formerly Twitter) on the 21st, writing, "Even after the rental period ends, the ongoing exemption from heavy capital gains taxes for multi-homeowners is deepening the lock-up of listings."
The purchase-registered rental system grants tax benefits that exclude multi-homeowners from heavy taxation when transferring if they register their dwellings for rent. Due to speculative abuse and lock-up of listings, new apartment registrations are currently suspended.
Administrator Lim said, "Of the roughly 27,000 individual registered rental apartments that were canceled in Seoul, excluding the roughly 2,000 units presumed to have already been disposed of as capital gains taxes were filed with the National Tax Service, about 25,000 units still appear to be held." Lim added, "In fact, there would be no reason to sell," noting, "because there are extraordinary benefits under which heavy capital gains taxes for multi-homeowners are not applied permanently, and the special long-term holding deduction is applied more favorably."
Lim continued, "If there is no reform of the system, there is a high likelihood that a similar lock-up of listings will recur for these as well," adding, "A review of the rental market may be necessary, but how good would it be if we give registered rental multi-homeowners a chance to exit so that the roughly 68,000 Seoul apartments—combining units already canceled and those slated for cancellation—come onto the market and add to supply."
Earlier, President Lee Jae-myung said in a post on X in Feb., "We should allow some locked-up listings an opportunity, but wouldn't it be fair if, after the rental period ends, various tax regimes for registered rental dwellings are the same as for general rental dwellings," proposing that the continued exemption from heavy capital gains taxes for multi-homeowners in rental dwellings be discussed.
Lee added, "Because the preferential exemption from heavy capital gains taxes for registered rental dwellings would impose too heavy a burden if abolished immediately, there is also a plan to eliminate it after a certain period or phase it out gradually. There is also an opinion to limit the target to apartments only."